Hosted PBX Provider Speakeasy Giving Free Phones to New Signups

By removing the final capex barrier to VoIP adoption, the company hopes to spur rapid growth.

By Adam Stone | Posted Apr 15, 2010
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Broadband connectivity and phone services provider Speakeasy has thrown down the VoIP marketing gauntlet, announcing it will give away free Polycom IP phones, each a $139 value, to new Speakeasy VoIP customers.

The company has talked the talk, driving sales with the promise that small businesses could implement new phone systems with no upfront costs, said VP of Product Solutions Arnaud Gautier. Still, the company hasn’t quite walked the walk. After all, as customers have pointed out, the phones themselves still represent an upfront expenditure.

This disconnect hasn’t seriously thwarted success: Speakeasy saw 24 percent growth in new voice customers in FY2009-10, according to Gautier. The limited-time phone giveaway is an attempt to leap the last hurdle.

"We have been selling hosted voice for about six years now and the constant barrier to closing, the constant pain point—even when they love the service and love the company—the number one point has been the upfront equipment," Gautier said. "We’re trying to remove the last major barrier."

There have been a number of reasons why the Seattle-based, 380-employee Speakeasy has been thriving in recent years.

The economic slowdown has actually been a boon to business, Gautier said. "The recession has really helped that part of our business, because hosted VoIP really resonates with new customers who are struggling with capital expenses," he said.

At the same time, Speakeasy has been able to thrive in part because of its alliances. As a wholly owned subsidiary of Best Buy for Business for the past three years, the company has enjoyed a built-in measure of financial stability, Gautier said.

That financial stability no doubt helps the company manage the out-of-pocket pain that comes with giving away free phones, while it waits for the long-term payback. Speakeasy executives have done their best to ensure that journey is a smooth one.

The give-away promotion calls for a two-year contract, "and we have worked very hard with our hardware vendors to get very good prices on these phones. Then we are financing them through the recurring monthly charge. That’s the way it works, there is no magic," Gautier said.

The company is basing the promotion on the success already seen in the wireless industry, where low-cost equipment has helped drive customers into contracts. They’re betting that the strategy that has worked for mobile carriers will prove equally successful in driving VoIP adoption.

Gautier describes Speakeasy as eager to expand its footprint as IP telephony pushes into a period of rapid expansion. "It is a very fast growing category and we really want to make sure we build that beachhead," he said.

The company already feels the momentum building in the industry. "We are seeing much better awareness from prospects than even two years ago. When they talked to us two years they didn’t even understand what we are talking about. Now they are calling specifically for this," he said.

To bring in those calls, Gautier relies heavily on Internet marketing, which he calls a mixed blessing. On the one hand, it’s easy these days to know where to spend your money. "If you look at how small businesses make purchases these days, the first thing they are going to do is to Google," he said.

On the other hand, customers’ ability to search on the Internet is equaled only by their ability to leave nasty notes about you in the emerging world of social networking. The heightened pressure to remain Facebook-friendly and Twitter-worthy "gives customer satisfaction a completely different meaning."

Satisfaction is easy to define, in Gautier’s terms. Forget the low rates, ease of set up, free phones. Satisfaction means call quality, period. "If you had a dropped call right now you would not be happy, you would not keep that service for long," he said. As a VoIP provider, "if you can’t do landline quality voice service, you don’t have a business."

Want to know where Speakeasy will be in a year? Check your pants pocket.

"Integration of mobile devices within the enterprise business eco-system, into the way companies run their business, that has not happened yet, but it is definitely going to happen. The technology is definitely there. It is now just a matter of execution."

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